Empty Holiday Shelves Hinge on 120 Los Angeles Truckers

Trucks wait at the Port of Los Angeles in San Pedro, California. Drivers walked off the job and formed picket lines at three of the eight terminals at the Port of Los Angeles on July 7. Photographer: Patrick T. Fallon/Bloomberg

Aug. 4 (Bloomberg) -- For executives at the ports of Los
Angeles and Long Beach, the 120 disgruntled truck drivers who
picketed for five days last month proved to be little more than
a nuisance. Now the busiest U.S. ports face a potentially wider
problem: 7,000 longshore workers joining them.

“The big question now is whether the longshoremen walk,”
said Phillip Sanfield, a Port of Los Angeles spokesman. “There
would be some impact if the truckers disrupt traffic. But if the
longshoremen honor the picket lines? It’s much, much bigger.”

Should members of the International Longshore and Warehouse
Union refuse to cross the independent drivers’ picket line, it
would put at risk a portion of the $435 billion worth of annual
trade through Los Angeles and Long Beach, the two largest U.S.
ports. That would pinch retailers, many of which have been
struggling to increase sales this year, before the holiday
shopping season.

West Coast longshoremen have worked without a contract
since July 11. Talks between the union and employers represented
by the Pacific Maritime Association resumed today after a 10-day
break. The old contract prohibited longshore employees from
striking in support of the truck drivers. Now, without a
contract, the longshoremen are free to join picket lines.

“This could happen, and it would be quite dramatic,” said
Nelson Lichtenstein, director of the Center for the Study of
Work, Labor and Democracy at the University of California at
Santa Barbara. “It would shut the ports down. It would stop
everything.”

Picket Lines

Craig Merrilees, an ILWU spokesman, and Wade Gates, a
spokesman for the San Francisco-based Pacific Maritime
Association, declined to comment on the drivers’ situation.

Merrilees said by telephone that talks between the ILWU and
the maritime group resumed today. The union’s concerns include
workers’ safety, new technology that could displace workers and
health and pension benefits, he said.

Drivers walked off the job and formed picket lines at three
of the eight terminals at the Port of Los Angeles on July 7.
Longshoremen, who load and unload cargo ships, arrived for work
that day and chose to honor the pickets until an arbitrator
ruled that it was against their contract terms.

For the two hours that the longshoremen threw their weight
behind the picketers, at least two terminals, operated by
Scottsdale, Arizona-based American President Lines Ltd. and
Tokyo-based Yusen Logistics Co., closed their gates, Sanfield
said.

“The impact of the truckers themselves was really
minimal,” Sanfield said. “The bigger issue is when the
longshoremen follow suit, and they did but were ordered back to
work.”

Legally Restricted

Should they resume their work action, drivers would be
legally restricted to picketing the terminals where their
companies do business, which may limit their impact on port
operations, said Peter Olney, a retired organizing director at
the ILWU. Federal laws, such as the Taft-Hartley Act, that
restrict labor unions’ actions, may also curb the longshore
workers’ involvement, he said.

“People will cite the law, and lawyers are going to scurry
around with all kinds of theories,” said Olney, a former
advisory board member of the University of California at
Berkeley’s Labor Center. “In many situations, power and size
trump legal restrictions, and in this case, it’s really going to
be a question of strength and power.”

Harbor Use

Thousands of companies use the harbors in Los Angeles and
Long Beach to move merchandise, according to Art Wong, a Port of
Long Beach spokesman. They include Issaquah, Washington-based
Costco Wholesale Corp., Minneapolis-based Target Corp.,
Bentonville, Arkansas-based Wal-Mart Stores Inc., Atlanta-based
Home Depot Inc., Toyota, Japan-based Toyota Motor Corp. and
Berlin-based Mercedes-Benz AG. About 40 percent of all U.S.
container trade passes through the Southern California hub,
according to the ports.

The odds are not in favor of a strike right now, said David
Ross, a transportation analyst for Stifel, Nicolaus & Co. in
Baltimore. If negotiations drag on past Sept. 1, the possibility
of a work stoppage is heightened, he said. There was more
concern before the contract expired, and a lot of shippers took
care of third-quarter orders in the second quarter, Ross said.

“Both sides have now said that keeping cargoes moving is a
goal,” Ross said. “Nobody wants to be painted as killing the
U.S. economy.”

Another Stoppage

The maritime association, which represents shipping lines
and terminal operators, locked out workers at 30 West Coast
ports for 10 days in 2002 after contract talks stalled. The cost
of that interruption was $1 billion a day, according to the
maritime association.

Each day of another stoppage of that duration at the West
Coast ports, of which Los Angeles and Long Beach are by far the
largest, would sap $2.1 billion a day from the U.S. economy,
according to a June report from the National Retail Federation
and the National Association of Manufacturers.

By an almost two-to-one ratio, the Southern California
ports were the busiest in the U.S. last year when measured by
cargo value. Houston and Galveston, Texas, are the second-largest, followed by New York and New Orleans, according to the
American Association of Port Authorities, an Alexandria,
Virginia-based trade group. The two Texas ports lead the U.S. in
tonnage, followed by New Orleans and the Southern California
harbors, according to the association. Shanghai is the biggest
port by tonnage in the world, the association said.

The drivers haul cargo from the harbors. For years they’ve
protested against logistics companies that categorize them as
contractors, which they said deprives them of benefits and wages
to which they’re entitled.

Week’s Pay

Daniel Linares, a 58-year-old contract driver for Long
Beach-based Pacific 9 Transportation Inc., received a check July
30 for a week’s worth of wages. He said his gross pay was listed
as $1,333. The company deducted fees for his truck lease, a
parking space, maintenance, diesel fuel and insurance, he said.

“I have a check in my hands for $588,” he said.

Pacific 9 Transportation didn’t respond to calls seeking
comment.

Linares and other drivers agreed to suspend their strike
July 11 and enter a “cooling-off period” at the request of Los
Angeles Mayor Eric Garcetti, who asked the city’s port
commissioners to investigate the grievances.

‘Dicey Situation’

“It’s a dicey situation, and it’s a little too soon to
tell how everything is going,” said Barb Maynard, who works
with the International Brotherhood of Teamsters local that’s
helping the port drivers organize. “The guys were really
itching to go back out on strike.”

A work stoppage would threaten to halt traffic at the hub
just as the U.S. is showing signs of an economic recovery.
Manufacturing expanded last month at the fastest pace in more
than three years and the economy added more than 200,000 jobs
for a sixth straight month.

U.S. retailers are working to claw their way back from
harsh winter weather and shaky consumer confidence that cut into
their profits in the first quarter. Consumer spending in the
first three months grew at the weakest pace in five years and
June purchases rose less than forecast, climbing 0.2 percent,
Commerce Department data show.

“The last thing they need is for a consumer to come in the
door and not be able to get what they want because the retailer
doesn’t have it on the shelf,” said Brian Yarbrough, an analyst
with Edward Jones & Co. in St. Louis. “You don’t want to see
this in good times, but it makes it even worse in difficult
times when retailers are dying to drive traffic through their
doors.”

Labor Disruption

The impact of a labor disruption at the Los Angeles and
Long Beach ports would depend on how long it lasts, Yarbrough
said. Many retailers have enough items in their distribution
centers to replenish stores for a few weeks, but if it continues
for longer it could lead to empty shelves, he said.

The port’s staff is pulling together a report for the
mayor’s office after talking to people on both sides of the
fight, according to Sanfield, the Los Angeles port spokesman.

Longshoremen tend to respect picket lines, said Harley
Shaiken, a professor at the University of California at Berkeley
who specializes in labor and trade.

“The reality is the mayor of Los Angeles is involved, and
the consequences of a shutdown would be very costly and there
will be a real effort to avoid that,” Shaiken said. “Everyone
is concerned not just with avoiding the strike but avoiding
anything that looks like it’s going to cause a disruption.”